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Tackling undeclared work database

Undeclared work can be defined as work which is in itself legal but is not declared to the authorities for tax, social security and/or labour law purposes. Across the 28 Member States of the European Union, a great deal of effort is being invested into developing and testing policy measures that aim to tackle undeclared work.

Undeclared work is an ongoing problem and a strongly debated issue in the Netherlands. In July 2012 an agricultural employer was sentenced to three years in jail for exploiting foreign workers. This case came to the light through the recent intensified inspections by the interventions teams from the SZW Inspectorate (formerly the Labour Inspectorate), which has become more focused in its checks. The teams concentrate their inspection work on sectors having a dubious reputation: agriculture, construction and cleaning.

Prior to 2011, main contractors had to demand documentation from subcontractors demonstrating that they did not employ illegal workers and fulfilled their obligations to pay social security contributions. Under the new law, the subcontractors now have to provide a certificate, provided by social security bodies, to show they fulfil their legal obligations to their employees and pay social security contributions.

The government of the former Yugoslav Republic of Macedonia has initiated a campaign to raise awareness among students of the negative aspects of working informally. The focus targeted vocational school students in the first instance, as they were seen as the most likely group to engage in undeclared work.

In 2010, the Polish Ministry of Finance introduced new regulations, to decrease the number of entrepreneurs exempt from registering sales electronically and hence widen the general use of electronic cash registers. While the instant response by taxpayers has not been overwhelming, the initiative is still considered a step in the right direction, as it increases the level of equality before law.

In 2010, the Hungarian government introduced the Simplified Employment Act (2010/LXXV) to facilitate seasonal and casual employment notifications, reports and payments. The regulations of the Act can be viewed, and are viewed at political level, to be an anticipatory measure to tackle undeclared work. Official data shows that those employers who normally notify the authorities anyway are the most likely to use the new system. However, it is still unclear whether it will regularise the Hungarian labour market.

On 30 March 2012, Royal Decree Law 12/2012 introduced various tax and administrative measures aimed at reducing the public deficit. The new law establishes highly relevant modifications in taxation. Of the new tax measures introduced, the most noteworthy are those made in the Corporate Income Tax Law, particularly in relation to the deductibility of financial expenses. There is also a very relevant measure allowing taxpayers, both individuals and entities, to regularise past defaults. The group of measures approved includes many significant initiatives.

On 1 February 2012, a new law on the residence and travel of foreigners in Turkey came into force. This law brings to an end the so-called ‘visa runs’ by foreigners living in Turkey without a residency. For foreigners working in the undeclared economy in Turkey, this new law represents a significant obstacle to continuing their activities.
Background

Following long-standing pressure from civil society organisations supported by economic experts, the Polish parliament adopted a law legalising the situation of foreign citizens illegally residing in Poland and give them social rights. The amnesty was launched for the third time this century. The take-up by the target group (almost 10,000 applications) was higher than expected.